NERC vows improved power supply from July 1

Sopuruchi Onwuka

Homes and businesses in the country will begin get energy cost relief by next month when the Nigerian Electricity Regulatory Commission (NERC) has determined for total reset of the commercial relay designed to guarantee steady supply of electricity to legitimate customers in the market.

Chairman of NERC, Mr Sanusi Garba, who addressed media representatives in Lagos on Wednesday, declared that plans have been finalized to feed the national grid with 5000 megawatts of electricity or more on sustainable basis.

“Now, not only do now commit to 5000mw in July, will also see an opportunity to increase that contracted volumes from 5000 to 5,500 and 6000 mw. So, Nigerians can see a trajectory of an improvement not just maintaining what we have and the only way to make it is to get stability first and then assess if we have the infrastructure to ramp up to 5,500 to 6000, 7000mw,” he said.

Garba who spoke in the company of some commissioners and senior management officials of the agency explained that all players in the full power sector loop have committed to performance levels that would lead to incremental volumes of power available for different grades of customers in the domestic electricity market.

“So, we are going to start with 5000mw. Discos will commit to buy and Gencos will commit to generate and ensure that gas is there to provide this power. So, there will no stories of I don’t have gas to produce,” he explained.

Under the new arrangement, he said, the commission has further liberalized the market and adjusted the tariff system to reflect market reality, enhance the capacity and commitment of the distribution companies to buy generated power, as well as improve liquidity in the commercial relay that rewards all players from market returns.

And to resolve the issues of debt and operating losses in the gas-to-power programme, Garba explained that further liberalization of the market ensures that serves are governed by binding contracts among different players in the domestic gas market, upstream power sector and electricity retail market.  

“Between 2015 and 2016, there were challenges in doing tariff review to the extent that there were insufficient revenues collected by Discos. Under such a situation, you cannot get contracts. So, what has happened now is: with the support of government, with the support of CBN and so on, with all the receivables that are available to distribution companies, we have sufficient resources to ensure all the contracts are signed and payments will be made as and when due.”

He explained that the gas companies are now bound to supply gas to the generation companies which are also committed to supplying the distribution companies through the grid operator. He added that breaches in the contracts would come with severe consequences on the defaulting service provider.

According to Garba: “What we are trying to do is: consumers require the service, the Discos should commit to buying this electricity from those who are generating it; and Gencos that are generating the power must commit to buy the fuel to generate that electricity. And the only way it can be done and in a sustainable manner is if it is underpinned by contracts. And if any of the market participants defaults, then, obviously, there will be consequences for not providing what you said you will do.”

He declared that the provisions and application of the terms of contracts would rule out arbitrary operational decisions in the industry and permanently address the practice of load rejection by any distribution company in the system.

In providing details on the imminent operational changes in the industry, the NERC Commissioner in charge of Legal, Licensing and Compliance, Mr Dafe Akpeneye, the prevailing Nigeria Electric Power Industry Reform Act is being reviewed with intention to address grey areas on commercial regulation, enforcement, compliance and consequences.

He said the market would now be rules by binding commercial contracts and agreements that commit both the service provider and consumer to fulfilling their obligations to one another as the only option to avert consequences.

He said while consumers would be protected from sharp and exploitative market practices, they would also be subject to binding commitment to pay for services of face consequences of energy theft.

Mr Akpeneye stated that the legal basis for commercial interaction in the industry is being strengthened to provide deterrents to rascality, adding that production, supply and consumption of electricity in the market must provide commercial incentives for investments.